How to Turn Your Fair Credit Score Into a Good Credit Score

The average U.S. FICO score as of April 2021 is 716, which falls within the good credit score range. A 600 FICO score is below average and falls within the fair credit score range.

Although there are credit cards that target fair credit, the interest rates will be on the high side. You may even have trouble getting approved for a mortgage since 600 would be considered a subprime credit score by many lenders.

But you don’t have to stay in the fair credit range. There’s no reason you can’t bump your 600 score up into the good credit score range.

All you need is a better understanding of how scores work and the right strategies to improve your score.

FICO scores range from 300 to 850, with 850 being a perfect credit score.

Here are the FICO score ranges:

As you can see, good credit begins at 670, so a 600 score isn’t that far off. Your FICO score is composed of five factors. Once you understand each one, you’ll have a better idea about how to improve your score.

It’s possible that your lender could request a VantageScore, but since 90% of lenders use a version of the FICO score, I’m going to focus on FICO.

There are five factors that make up your FICO score. Here’s each factor and the weight it’s given by the FICO algorithm:

Your payment history is the most influential factor in your score. As long as you pay all of your bills on time, you’ll be in good shape. Lenders want to see that you paid as agreed, and that tells them you’re creditworthy. Once you miss a payment, it can really drop your score.

You have a credit utilization ratio, which is the amount of credit you’ve used compared with the amount you have available.

Here’s an example: Let’s say you have a credit card with a $1,000 credit limit and you have a $700 balance. This means you have a credit utilization ratio of 70% (700/1,000 = 70%). This ratio is considered unacceptable. You need a ratio that’s less than 30% to avoid a decrease in your score.

But here’s an insider tip: To really maximize this part of the score, keep your utilization ratio less than 10%. Using the details of our example, this means your balance shouldn’t exceed $100 (100/1,000 = 10%).

And before you think you can run up the balance on one card while keeping others low, you should know that the algorithm looks at your utilization ratio across all of your cards and at the ratios on each credit card.

The longer you have a good credit history, the better. This doesn’t mean you can’t have a very good score when you’ve only been using credit for a few years. But having decades of stellar credit certainly helps you maintain a very good or even an excellent FICO score.

Each time you apply for a credit card, it’s possible that your credit score could decrease about two to five points. The amount – if any – of the decrease depends on other factors in your credit report.

While you’re trying to improve your score, limit applications for new credit. Space these about six months apart. There’s also a psychological reason to avoid a lot of credit activity. Your credit card issuer reviews your credit report every month or so. This is a soft inquiry, so it doesn’t lower your score.

But if the issuer sees that you’re applying for a lot of credit, it looks as if you’re in a financial crisis. This could lead to a decrease in your current credit limit, which decreases the issuer’s risk.

Remember the credit utilization ratio we discussed above? If your credit limit is decreased, you lose some of your available credit. This increases your ratio and makes your score go down.

To get high marks for this part of the FICO score, you need to show you can handle different types of credit. For instance, your credit report might show you have a student loan, mortgage or auto loan, which are installment loans.

Revolving credit is another type of credit. With this type of loan, you have a limit or line of credit, and you have the flexibility to use as much or as little as you need. Examples of revolving credit include credit cards, home equity lines of credit and personal lines of credit.

The longer you have credit, the more likely you are to have a good mix. So don’t go buy a car to get an installment loan on your credit report. Life has a way of making sure we end up with a variety of credit-related accounts.

There isn’t a magic formula to make your score jump up to 670, but if you follow these steps, you’re on your way to good credit: